Con-way buys Contract Freighters
Con-way announced this morning that it will buy Contract Freighters Inc. (CFI), a privately held North American truckload carrier based in Joplin, Mo., in a transaction valued at $750 million.
San Mateo, Calif.-based Con-way anticipates a significant boost in its operations through the CFI acquisition. The deal, which is expected to be finalized by the third quarter, involves the takeover of CFI’s fleet of more than 2,600 tractors and 7,000 trailers. CFI has more than 3,000 employees on its payroll, of which 2,500 are drivers. The deal will establish Con-way as the sixth-largest trucking outfit in North America.
In a statement, Douglas W. Stotlar, Con-way’s president and chief executive officer, called the CFI acquisition “a cornerstone of our strategic plan to grow the company, build competitive advantage and increase shareholder value.”
Con-way is a $4.2 billion company. Its three primary operating companies are Con-way Freight, Con-way Truckload and Menlo Logistics. The company and its subsidiaries operate from more than 500 locations across North America and in 20 countries.
Con-way’s Truckload division is expected to generate more than $500 million in annual revenues through the CFI acquisition. Con-way officials noted that the merger of trucking capabilities will give the company an expanded reach and a more diversified service mix of less-than-truckload, truckload and supply chain services, “helping to moderate the effects of cyclical swings in the business units.”
CFI already serves as Con-way Freight’s largest provider of contract services for long-haul transcontinental truckload transportation. Con-way said the acquisition will allow it to “retain margins from this contract business.”
“Con-way Freight is CFI’s largest customer, and the company foresees opportunities to further optimize freight operations for both the LTL and truckload networks through this acquisition,” Con-way said.
Through the CFI acquisition, Con-way officials plan to expand the company’s presence in Mexico. For about 20 years, CFI has operated in Mexico and today is recognized as one of the largest cross-border truckload carriers in this market. With CFI in the fold, Con-way foresees increased business opportunities for its Freight division and Menlo Logistics in Mexico.
The combination of companies also offers opportunities for Con-way to expand its presence in key industries. “CFI’s strong customer base in the retail and consumer products industries complements Con-way Freight’s strength in the industrial and manufacturing sector, and also aligns well with Menlo Logistics’ principal industry verticals,” Con-way said.
Menlo manages about $600 million in domestic truckload transportation services on behalf of its shippers. “The acquisition will present opportunities for CFI and Menlo to collaborate, where practical, on freight flows to further optimize operations for its customers, introduce new services, and drive efficiencies in the Con-way network,” Con-way said.
According to a press statement, the acquisition is structured as a merger, with Con-way buying CFI’s parent holding company, Transportation Resources Inc. Con-way intends to fund the acquisition through existing cash resources together with proceeds from debt financing. Morgan Keegan & Co. served as the lead financial advisor to Con-way, with additional advisory support and financing provided by Goldman, Sachs & Co.